What Doesn't Work on Wall Street

‍

• Subscribe to my YouTube Channel HERE.

‍

I'm interested in anything that beats the market.

And the famous book, What Works on Wall Street, is a great place to get ideas.

But those ideas are pretty old. Is there anything more current?

It's a tough subject, though, this goal of beating the market.

Everyone in the world is always telling us it's impossible to beat the market. Academicians are still even teaching the Efficient Market Hypothesis in schools. (Even after years of proof to the contrary, high education is still teaching stuff that clearly isn't true.)

It's possible to beat the market, but it's super hard.

So, again, how can we find a solution?

Well, as Sherlock Holmes once told us, to find out what something is, we must first find out what it is not.

(I'm paraphrasing.)

To that end, I'm going to use some research I've been doing over the past few years.

If you're not aware, I track about 100 different stock portfolios on a daily basis. Some of these portfolios go back to 2023.

Why do I do it?

I want to see what works on Wall Street.

What have I found?

A lot of things that don't work.

So here are some great ideas that don't look like good opportunities for us. By pinpointing what doesn't work, we can focus on something that does seem to work.

The first thing I tracked was an Expert Advisor "Gone Fishing" portfolio. It only uses funds and it's perfect. It incorporates small caps, mid-caps, value, inflation hedges. This portfolio has everything.

And how has it done since August 2023?

Here's the portfolio first and then the performance:

It's gotten smoked.

Such a good idea from a money expert. And it's underperformed the market badly.

The next one I tracked was the "Retire Right" article that listed funds owned by billionaires.

Billionaires are the smartest people in the world, right, so we should copy them.

Here's the portfolio and then the performance:

It's also done terribly. Not even close to the market.

Then I tracked Goldman Sachs' top 40 stocks with 100% upside. Goldman Sachs is the best and stocks with 100% upside should have soared.

Here's how all 40 of the recommendations have done when combined into a portfolio since October 2023:

Goldman Sachs Top 40: 18.55%

SPY: 51.87%

Yikes.  

And one more portfolio I started tracking was from the venerable firm Morningstar. As we all know, Morningstar is the best of the best when it comes to stability, value, and trustworthiness.

And back in 2023, Morningstar published an article on the Top 3 Dividend Stocks to buy now.

Those three were ALB, MDT, and EPD. The cases laid out by Morningstar were impeccable and compelling.

So, how have those three done since October 2023?

They've done horribly. The worst we've seen so far.

So, where does that leave us.

We've seen recommendations from an Expert Advisor, Billionaires, Goldman Sachs, and Morningstar. You can't find better pedigrees and they're all underperforming the market by a country mile.

We've definitely found out what doesn't work. And we've learned that maybe we should think for ourselves and use our own logic.

So let's do just that.

What will almost certainly beat the market by a wide margin over the long-term?

Leveraged ETFs.

Yes, we're told they're way too dangerous for us simple folk.

But here's how an equal-weighted, buy-and-hold portfolio of SPXL and TQQQ has done since August 2023:

They've absolutely killed the market, as we expected.

Yes, they're dangerous. Yes, this isn't financial advice. Yes, this is for entertainment purposes only.

And, yes, the drawdowns are huge.

But if we want to beat the market over the long-term, it appears leveraged ETFs can possibly do that.

And then some.

Once again, THIS IS NOT FINANCIAL ADVICE.

Talk to you soon.

‍